Asian shares drift higher as GBP eases on YouGov poll

On Wednesday, Asian stocks drifted higher, but advances were patchy ahead of the Fed and the ECB meeting. The pound wobbled as opinion polls pointed to a tight U.K. election later this week.

Investors are also cautious ahead of the scheduled deadline for the U.S. tariff on Chinese goods this Sunday. However, a stronger than expected Chinese loan data provided some support for the sentiment.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.5% higher. 

Hong Kong’s Hang Seng and Australia’s S&P/ASX 200 led gains with 0.7% rises. 

Shanghai’s blue chips rose by 0.2%.

Japan’s Nikkei did not change. Futures pointed to flat open in Europe and on Wall Street.

Investors are facing conflicting reports, and have begun to suspect that even if tariffs are delayed, it will take until 2020 before the U.S. and China can agree on a deal to roll back tariffs.

“Every day we get a little bit of a nudge one way or the other,” said Rob Carnell, Asia-Pacific chief economist at ING in Singapore. 

“You just don’t know who to believe, whether these comments have any basis in reality or whether they’re a negotiating tactic,” Rob added.

On Tuesday, there was some good news that China’s economy was rebounding with new bank loans more than expected in November. It’s a sign that recent cuts to key lending rates were finding some traction.

Without harder news on the US-China trade, investors’ focus turned to the Fed policy meeting and its outlook for the economy due today, Britain’s election, and a European Central Bank (ECB) meeting.

Markets widely expect the Fed to hold rates steady. Investors are also watching whether the ECB will change its view of the economy and its 2% growth forecast for next year.

U.S. inflation data due at 1330 GMT, expected to hold steady, may further reduce chances for rate cuts next year should it surprise on the upside.

Christine Lagarde holds her first meeting and news conference as ECB chief on Thursday.

GBP eases on YouGov poll

The pound was the biggest mover among major currencies. It shed 0.3% to hit $1.3128 after the closely watched YouGov poll. The survey showed the ruling Conservative Party tracking towards a much slimmer majority win than the forecast a fortnight ago.

The GBP recouped some losses during the day but remained under the eight-month high struck overnight. Investors were more confident of a Conservative win and expected it could end uncertainty over Britain’s exit from the European Union.

However, the YouGov’s research director, said the results showed a hung parliament was possible.

“Granted, this still portrays a Conservative majority, but given what is already priced … the actual outcome has resulted in some of the heat coming out of a fairly frothy market,” said Chris Weston, head of research at Melbourne brokerage Pepperstone.